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Oftel report to slash call costs to mobiles by #1 billion

by Andrew Craig

BT has been ordered to slash the cost of calling mobile phones from its fixed lines, by the UK telecomms watchdog Oftel.

Customers will now see calls from BT phones to mobiles using the Vodafone and Cellnet networks fall by 25 per cent. Oftel said the decision would benefit phone users to the tune of #1 billion over the next three years.

Today's decision follows an investigation launched by Oftel in March into the cost of calling mobiles on the UK's largest networks, Cellnet and Vodafone, which it said was too high. Oftel called in the Monopolies and Mergers Committee (MMC) to conduct the investigation.

Oftel also said the practice of charging for unanswered calls on Vodafone and Cellnet's networks must stop.

Oftel's director general David Edmonds said in a statement that he was pleased the MMC had accepted its concerns that the current charges are against the public interest.

"This is excellent news for the consumer. If Orange and One 2 One follow the prices down, about #1 billion extra will be left in the pockets of phone users over the next three users," he said.

BT gave a cool response to the decision saying it welcomed the conclusions, and that they were in line with its expectations. "The recommendations offer significantly lower prices for customers, which can only help stimulate the mobile market further," BT said in a statement.

Both Cellnet and Vodafone said they will be looking carefully at the recommendations and await publication by Oftel of the full report and proposals in January.

Vodafone said in a statement that all customers should benefit from some reduction in calls to mobiles, but added that cuts would be, "only by around 5 percent more than we had already planned."

Analysts said the changes will hit operator's revenues. "Rather than generating an increase in volume of traffic, it will merely reduce the amount of revenue they make from this type of call," said Dataquest senior analyst Peter Richardson.

One 2 One reacted immediately saying the cost of calls to its network would only fall if Oftel extended the decision beyond Vodafone and Cellnet to include the smaller operators, Orange and itself.

"Without this regulation, any change we introduce with respect to interconnection, BT wouldn't necessarily be obliged to pass on to customers," said a One 2 One spokesman.

Orange said it welcomed the outcome of the investigation. "We fully expect the outcome of the review of BT's charging structure to result in significant benefits for Orange customers," the company said in a statement.